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July 26, 2016

Study: Wind & Solar up to 5X More Costly than Existing Coal and Nuclear

July 26, 2016
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WASHINGTON – A new study from the Institute for Energy Research finds that electricity from new wind and solar power is 2.5 to 5 times more expensive than electricity from existing coal and nuclear power.

This innovative study relies on data from the Energy Information Administration and the Federal Energy Regulatory Commission to find the levelized cost of electricity from existing plants, not just the cost of electricity from new power plants as is typical with many studies.

In addition, IER’s study estimates the costs imposed on the grid by the intermittent nature of wind and solar power. Factoring in these “imposed costs” provides a more realistic estimate of what electricity from new wind and solar power costs. In fact, solar power’s imposed costs actually increase as more capacity is added to the system.

The following chart shows the stark contrast between the cost of electricity from existing and new sources:

 LCOE Existing vs. New

 

As the chart indicates:

  • Electricity from new solar is nearly 5 times more expensive than from existing nuclear and over 3.5 times more expensive than from existing coal.
  • Electricity from new wind is over 3.5 times more expensive than from existing nuclear and over 2.5 times more expensive than from existing coal.

“Much of our existing coal and nuclear fleet could continue to provide affordable, reliable electricity for decades to come if not for policies like the Obama administration’s carbon regulations or the deal struck in California to shut down Diablo Canyon,” said IER President Thomas Pyle. 

“Unnecessarily shutting down our existing generation in favor of expensive and intermittent wind and solar power means Americans will be left with higher electricity bills and less money in their pockets. This will have the harshest impact on poor and middle class families who spend more of their hard-earned money on energy costs. This study adds a much-needed reality check to the debate over our nation’s electricity policy.”

Click here to read the full study.

This study was conducted by Tom Stacy, a former member of the ASME Energy Policy Committee, and George Taylor, PhD, the director of Palmetto Energy Research. The source of the calculations used in this study is a compilation of data reported by the generators themselves to FERC and EIA.

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  • michaelgoggin

    Nice try, but this attack was comprehensively rebutted when you tried it last year:
    http://www.aweablog.org/koch-groups-try-debunked-wind-attack-for-a-fourth-time/

    Michael Goggin
    American Wind Energy Association

    • Chris Warren

      And we thoroughly debunked your rebuttal here:
      http://instituteforenergyresearch.org/analysis/wind-lobbyists-critique-of-ier-study-fails-on-all-fronts/

      Chris Warren
      Institute for Energy Research

      • ben

        It is obvious to any one that new generation infrastructure is going to produce more costly power than existing infrastructure, based on the premise that the greatest component of cost is the installation cost for the assets, which is not included in the costings for existing generators. Only the cost of fuel, maintenance, and financing costs are included for existing generators. Perhaps the contrast would not be so great if you actually considered that substantial proportions of existing coal infrastructure are nearing the end of their lifespan, rather than assuming they can all continue to produce power for “decades to come”. A 40 year old generator may require many hundreds of millions of dollars in upgrades and maintenance to extend its life for another 5 years. Have you actually done any studies to indicate the average remaining lifespan of this existing coal infrastructure?
        You do have a point that it is wasteful to make redundant expensive infrastructure before it has been used to its full potential i.e worn out. However I think you would find that half of the existing coal fleet is nearing the end of lifespan, and some of it will be already far past its use by date.

        • Tom Stacy

          Great comment! Who are you? We should talk. I am findable. But in short, we did not assume all existing plants are paid off. We actually derived each facility’s remaining capital cost repayment/recovery based on general accounting assumptions and ROI expectations using formulae provided to us by power plant operators. We also established operating cost trend lines by plant age, showing that it will indeed be decades before the AVERAGE existing plant of each technology becomes more costly to operate than it’s most likely replacement with new capacity. Because of what those cost trend lines show, I cannot agree with you about “half” of the existing coal fleet is nearing the end of lifespan.” I do agree that some coal plants are due to retire – for various natural and/or forced reasons, and they certainly are retiring or soon will.

          • ben

            I suppose it is inevitable that replacing existing capacity with wind or solar will cost more in the short to medium term.The question then becomes, is the extra investment worth while, taking into consideration the uncertain consequences of continuing to burn fossil fuel as our main source of energy.
            Another point of consideration is that, with sufficient interconnectivity, wind power can provide sufficient supply at all times.This is possible due to the fact that wind is always blowing somewhere,even within a single continent, and that a wind turbine can give a substantial portion of its rated output with only very modest wind speed.Obviously the interconnectivity has its costs.
            And one should also consider the costs associated with the degraded health and wellbeing caused by the mining and combustion of coal, which is known to produce many premature deaths amongst the general population.

          • Tom Stacy

            Ben: I see where you are coming from on climate and pollution. But what you say about wind alone can be a full time source and cover for itself is simply not true. I have done the analysis of this hourly for 2013, 2014 and 2015 using MISO alone, PJM alone, CAISO alone, and then each paired with the other and then all three. The capacity value by our methodology improved only slightly in the PJM + MISO case (to about 5% of nameplate) and with all three together only to a little over 8% of nameplate. Correlation coefficients only rise 0.02 from -0.3 to -0.28 comparing percent change in load to percent change in wind output (% of peak load / peak generation) That is nowhere good enough to justify the cost of the transmission infrastructure and losses. As far as pollution, even the best mix of gas plus wind at 50:50 energy and 44:56 capacity as a base load resource has a CO2 avoided cost per ton higher than CCGT alone until gas price hits (and remains for 20 years) above $11/MMBtu. At those gas prices gas+wind is more expensive than new nuclear in terms of $/ton CO2 avoided.

          • ben

            Unfortunately your studies must include methodological flaws, as it is highly unusual for any wind installation to give average output of 5% of nameplate capacity.Figures closer to 30% are typical.Well located wind farms have shown around 40% capacity factor.
            It is hardly surprising your studies show unfavourable costings, since you are using figures which are entirely inconsistent with reality.I guess we cannot rely on studies, since they invariably contain biases which scew the result toward whichever result the author wishes to see.

          • Travis Fisher

            Ben, I just want to clear up one miscommunication here. Tom is referring to capacity value, which is different from capacity factor and absolutely crucial for maintaining system reliability. You are referring to capacity factor, which is certainly an important statistic but not to be confused with Tom’s figures above.

            In our report, we are very careful to explain how we derive capacity value for intermittent resources (wind and solar are calculated and explained separately but the concept is the same). See our discussion on pages 26-28 as well as Appendix A for wind and Appendix B for solar. Notably, the capacity value for solar begins relatively high and falls quickly as more PV is added to the system.

            Here’s an example that distinguishes capacity value from capacity factor: a combustion turbine gas plant could have a capacity factor of less than 10% while its capacity value is over 90%. At the same time, a wind facility could have a capacity factor of 40% while its capacity value is 3%. As Tom explains above, even taking the entire fleet of wind facilities across multiple multi-state regions can still yield capacity values for wind in the single digits. I hope that clears up any confusion.

            Travis Fisher
            Institute for Energy Research

          • sons

            We are talking about a desperate battle to defeat global warming that all credible climate scientists conclude can end earth’s ability to support life.

            Should we be looking at costs to decide if this can be accomplished? Did we engage in cost/benefit analysis deciding whether to fight WWII to preserve a free America or not?

            All consideration of costs and other constraining discussion wasn’t even brought up. Anyone doing so would have been considered a traitor and a nut case.

            The same urgency should be applied to defeating our greatest threat of all time – global warming. Why is it not?

            William Gloege

      • ben

        Actually there are about 500 coal plants in the u.s which were constructed more than 50 years ago. These are the plants you assume will still be generating in 30 years time?
        Also interesting to note that the average capacity factor of coal is “only” about 65% on average, compared to 35-40% for wind. Coal proponents like to factor in the cost of base load power to make up the shortfall in the capacity factor of wind, but they don’t like to factor in the cost of baseload power which coal generators require for the 35% of the time they do not generate power….

        • Tom Stacy

          ben – Good comments! Yes, absent regulatory stricture it is very feasible that coal fired power plants could be operational at age 80. It depends on their operating costs (fixed and variable) vs. the operating costs of their prospective capacity replacement. It is unfortunate wholesale markets fail to properly value capacity relative to energy. A surprisingly large amount of the preferential treatment granted to intermittent generators is buried in the wholesale market rules, never even to be considered by lawmakers or, God forbid, electricity consumers! As far as capacity factors, this is one of the interesting parts of the report: capacity factors in the real world are far different than the capacity factor assumptions made by EIA and others in their LCOE reports. Indeed, capacity factor is a VARIABLE, not a constant, and it levers all-in cost to the extent a unit has fixed costs. The takeaway is that wind (and at high market penetration, solar) harm the economics of new/newer capacity resources more than they harm the economics of amortized and depreciated (older) capacity resources. Intermittent or not, over-capitalization (over-capacitization) leads to under-utilization, which raises levelized cost. This lever is important for regulators, lawmakers and market designers (RTOs/ISOs with input from FERC) to fully understand.

  • You will like our protest from 2012 at the Denver Federal Center Solar Array. Our banner message (on recycled butcher paper) was:

    TRADE PANELS FOR PIPELINE
    GREEN ENERGY = RED INK

    You will find an article and a great photo of our protest message at my Pundit Pete blog.
    http://punditpete.blogspot.com/2012/03/green-energy-protest-highlights.html

    Feel free to link to it and/or share the photo. We had fun. We were not arrested.

  • Philip F Stone

    Any already existing power generation system will be cheaper (not counting the costs to the environment) than building a new system. Dah—wouldn’t a new car cost more than continuing to use the old car? It doesn’t take a ‘study’ to see that!

    • Tom Stacy

      I agree with what you say as far as it goes, Philip. But this report goes beyond spotlighting the elephant in the room. It defends the idea that power plant economic longevity is often far greater than the lifespan assumptions made by EIA and others, using FERC-collected financial data over the past twenty years. The report also explains why intermittent generating technologies impose costs onto the dispatchable fleet (especially those most likely on the margin in wholesale markets), and then provides a mathematical framework to reasonably estimate those costs. I hope you take time to read the report and contemplate its value beyond your comment here. (~;

  • Elmer Fittery

    everything I see at this site says…

    conventional energy sources are cheaper.

    How is this possible when sun and wind are free.

    This site seems to be a mouth piece for the oil, gas and coal industry.

    Once the wind solar battery become mature, oil gas and coal will go bye bye just like the black smiths went by by in the transition phase from using horses to using cars.

    Did you know that Exxon still hasn’t paid the fines levied against then after the Exxon Valdeze oil spill in Alaska. At least that is what I heard, Hope the fines levied against BP don’t get brushed under the rug by the bought BIG OIL GAS COAL legislators in Congress and Senate.

  • Mark Bahner

    I’m curious…why is the existing cost of a CT gas turbine $88.2/MWh, but the cost of a new CT gas turbine $263/MWh?

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